US Secretary of State Hillary Clinton addresses the annual American Israel Public Affairs Committee (AIPAC) policy conference in Washington on March 22, 2010. Clinton urged Israel to make "difficult but necessary choices" for Middle East peace but promised her "rock solid" support for its security.

Photo: Nicholas Kamm, AFP/Getty Images

US Secretary of State Hillary Clinton addresses the annual American...

The United States and Israel on Monday attempted to get their relationship back on track after nearly two weeks of tension by continuing to disagree on Jewish construction in a disputed area of Jerusalem but pledging to press forward on peace efforts with the Palestinians.

Secretary of State Hillary Rodham Clinton defended the administration's stance before a leading pro-Israel group in Washington, then met one-on-one with Israeli Prime Minister Benjamin Netanyahu for more than an hour before he offered a sort of rebuttal at the same gathering of the American Israel Public Affairs Committee. He met with Vice President Joe Biden, and is to meet with President Obama tonight.

Israel on March 9 announced the construction of 1,600 homes in East Jerusalem, where Palestinians hope to make their capital, during a goodwill tour by Biden, prompting a tense 45-minute phone call from Clinton to Netanyahu on March 12.

The administration has pressed Netanyahu for a reversal of the housing approval, gestures to the Palestinians, and agreement to add Jerusalem and other final status issues to the agenda for indirect talks with the Palestinians being arranged by special envoy George Mitchell. Netanyahu appears to have accepted the latter two but rejected any concession on the first.

In a defiant speech Monday night before 8,000 cheering people attending the AIPAC conference, Netanyahu declared, "The Jewish people were building Jerusalem 3,000 years ago, and the Jewish people are building Jerusalem today. Jerusalem is not a settlement. It's our capital."

He added that nearly 250,000 Jews "live in neighborhoods that are just beyond the 1949 armistice lines," all within a five-minute drive from the parliament. "They are an integral and inextricable part of modern Jerusalem. Everyone knows that these neighborhoods will be part of Israel in any peace settlement. Therefore, building them in no way precludes the possibility of a two-state solution."

Clinton used her speech before the AIPAC conference to defend the administration's pressure on Israel and to make the case that pursuing peace now is essential, because technological and demographic changes are putting Israel at risk and making the "status quo" unsustainable. Better rocket technology used by militants in the Gaza Strip and southern Lebanon is putting many Israeli towns and cities at risk, even those far from the border, she said. Long-term population trends mean that one day, there will be more Palestinians under occupation than Jews in Israel.

"The inexorable mathematics of demography are hastening the hour at which Israelis may have to choose between preserving their democracy and staying true to the dream of a Jewish homeland," Clinton said. "Given this reality, a two-state solution is the only viable path for Israel to remain both a democracy and a Jewish state."

Clinton was greeted respectfully by the group, which has criticized the public spat with Israel, and won applause when she spoke of defending Israel's security, promised sanctions over Iran's nuclear program that "will bite," and criticized Palestinian incitement.